Another Snoozer of a Day in Silver and Gold

06 February 2019 — Wednesday

YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM


The gold price didn’t do much of anything anywhere on Planet Earth on Tuesday…trading within a five dollar range all day long.

The high and low ticks obviously aren’t worth looking up.

Gold finished the Tuesday session in New York yesterday at $1,314.80 spot, up $2.90 on the day.  Net volume barely fogged a mirror at a hair under 121,000 contracts — and there was just under 8,600 contracts worth of roll-over/switch volume in that precious metal.

Ditto for silver, as its price traded in a ten cent range yesterday.  The only ‘action’ there was that the tiny rally at the COMEX open was capped and turned lower very shortly after it broke above unchanged on the day.  From there it was sold down until noon EST — and it crept higher by a few pennies into the 5:00 p.m. close.

Of course the high and lows aren’t worth looking up, either.

Silver closed on Tuesday at $15.825 spot, down 1.5 cents on the day.  Net volume, like for gold, was exceedingly quiet…only around 37,700 contracts worth — and roll-over/switch volume was a bit over 7,100 contracts on top of that.

The platinum price didn’t do much in Far East and early Zurich trading on their Tuesday — and was up a dollar at the COMEX open.  It jumped 4 bucks at that point, but was capped almost immediately — and then sold down a couple of dollars on the day by the COMEX close.  It didn’t do much after that.  Platinum finished the day at $817 spot, down 2 dollars from Monday’s close.

Palladium traded pretty flat until the Zurich open — and it began to head a bit higher from that point, but in the most erratic of fashions.  It closed at $1,161 spot, up 13 dollars on the day.

The dollar index closed very late on Monday afternoon in New York at 95.85 — and then opened down a few basis points once trading began at 7:45 p.m. EST in New York on Monday evening…8:45 a.m. CST on their Tuesday morning.  It chopped quietly sideways from there, but popped above the unchanged mark by a handful of basis points starting at around 3:10 p.m. China Standard Time on their Tuesday afternoon.  From that juncture, it traded erratically sideways until shortly before 9 a.m. in New York.  A somewhat more serious ‘rally’ began at that point — and all the gains that mattered were in by about 10:10 a.m. EST.  The index chopped quietly sideways from there into the close.  The dollar index finished the Tuesday session at 96.07…up 22 basis points on the day.

Here’s the DXY chart courtesy of Bloomberg once again.  Click to enlarge.

And here’s the 6-month U.S. dollar index chart from the folks over at stockcharts.com — and the delta between its close…95.82…and the close on the DXY chart above, was 25 basis points on Tuesday.  Click to enlarge as well.

The gold stocks opened a bit below unchanged — and began to sag shortly after the afternoon gold fix in London, with their respective lows coming around 11:15 a.m. in New York trading.  They began to rally from there — and that rally, such as it was, gained more momentum as the trading day drew to a close.  The HUI finished on its high of the day 170.00 according to Kitco, as Nick’s HUI chart below ceased recording data about twenty-five minutes before the close.  The HUI finished higher by 0.62 percent.

The silver equities opened about unchanged — and also sank to their respective lows at 11:15 a.m. EST.  They also began to rally at the same time as the gold stocks — and closed on their absolute highs of the day as well.  Nick Laird’s Intraday Silver Sentiment/Silver 7 Index chart closed higher by 1.13 percent.  Click to enlarge if necessary.

And here’s Nick’s 1-year Silver Sentiment/Silver 7 Index chart.  Click to enlarge as well.

The CME Daily Delivery Report showed that 54 gold and 9 silver contracts were posted for delivery today within the COMEX-approved depositories on Thursday.

In gold, of the five short/issuers in total, the only two that mattered were Advantage and ABN Amro with 23 and 20 contracts out of their respective client accounts.  The largest long/stopper by far was JPMorgan, with 30 contracts…18 for its own account, plus 12 for its client account.  In second place was Citigroup, with 16 for its own account as well.

In silver, the sole short/issuer was Advantage out of its client account.  Of the five long/stoppers in total, Morgan Stanley picked up 4 — and JPMorgan and Advantage picked up 2 contracts each — and all for their respective client accounts.

The link to yesterday’s Issuers and Stoppers Report is here.

The CME Preliminary Report for the Tuesday trading session showed that gold open interest in February fell by 411 contracts, leaving 1,178 still open, minus the 54 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that only 319 gold contracts were actually posted for delivery today.  That means that 411-319=92 more gold contracts disappeared from the February delivery month.  Silver o.i. in February dropped by 97 contracts, leaving 17 still around, minus the 9 contracts mentioned a few paragraphs ago.  Monday’s Daily Delivery Report showed that 106 silver contracts were actually posted for delivery today, so that means that another 106-97=9 silver contracts just got added to February.


For the third consecutive day, there was a withdrawal from GLD.  This time an authorized participant took out 47,249 troy ounces.  Since the end of January, there has been 387,450 troy ounces withdrawn from GLD.  There were no reported changes in SLV.

There was a sales report from the U.S. Mint on Tuesday.  They sold 3,500 troy ounces of gold eagles — 2,000 one-ounce 24K gold buffaloes — 500 one-ounce platinum eagles — and 355,000 silver eagles.

There was no physical in/out movement in gold over at the COMEX-approved depositories on the U.S. east coast on Monday.  But there was 94,911 troy ounces [net] transferred from the Registered category — and back into Eligible.  Four depositories were involved — and if you wish to check the numbers, the link to that is here.

In silver, there was 1,170,187 troy ounces received — and 661,847 troy ounces shipped out.  CNT picked up one truckload…599,893 troy ounces…and HSBC USA picked up the other…570,293 troy ounces.  In the ‘out’ category, there was one very big truckload…660,838 troy ounces…shipped out of CNT as well.  The remaining 1,009 troy ounces…one good delivery bar…departed Brink’s, Inc.  There was also 494,334 troy ounces transferred from the Eligible category — and into Registered.  Of that amount, there was 336,101 transferred at CNT — and the remaining 158,232 troy ounce transfer was at Brink’s, Inc. That’s most likely scheduled for delivery in February sometime. The link to all this activity is here.

Despite the New Year holiday over there, there was decent activity at the COMEX-approved kilobar depositories in Hong Kong on their Monday.  They received 3,059 of them — and shipped out 1,050.  All of this occurred at Brink’s, Inc. of course — and the link to that, in troy ounces, is here.


The Commitment of Traders Report for positions held at the close of trading on Friday, December 31, 2018 showed butt-ass ugly numbers in silver — and weren’t that swell in gold, either.

In silver, the Commercial traders increased their short position by a whopping 17,985 contracts, or 89.9 million troy ounces of paper silver.

They arrived at that number by decreasing their long position by 3,131 contracts — and they added 14,854 short contracts as well.  It’s the sum of those two numbers that represents their change for the week.

Ted and I didn’t get into the breakdown of the Big 4, Big ‘5 though 8’ large traders…or the raptors [the 31 odd small Commercial traders other than that Big 8] on the phone yesterday afternoon.  But in aggregate, they’re all back to being net short silver in the COMEX futures market.

Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus more…as they added 7,379 long contracts — and reduced their short position by 13,855 contracts…for a total swing of 21,234 COMEX contracts.

The difference between that number and the Commercial net short position…21,234 minus 17,985 equals 3,249 contracts, was made up as it always is, by the traders in the ‘Other Reportables’ and ‘Nonreportable’/small trader categories.  Here’s the snip from the Disaggregated COT Report for silver.  Click to enlarge.

The Commercial net short position in silver is now up to 57,854 COMEX contracts, or 289.2 million troy ounces.

Ted said that it certainly appeared that JPMorgan increased their short position during the reporting week by many thousands of contracts — and he also mentioned that fact that Citigroup may now be active on the short side in silver as well.  He’s going to think about it overnight — and what his thoughts are, will appear in his mid-week commentary this afternoon.

Here’s the COT chart for silver.  But don’t forget, it’s almost five weeks out of dateClick to enlarge.

Friday’s COT Report, which will be four weeks out of date, will show further deterioration as well, but not even remotely close to the number that’s shown above.


In gold, the commercial net short position increased by a further 16,395 contracts, or 1.64 million troy ounces of paper gold.

They arrived at that number by increasing their long position by 195 contracts.  But they also added 16,590 short contracts — and it’s the difference between those two numbers that represents the change for the report week.

Under the hood in the Disaggregated COT Report, the Managed Money traders only accounted for fifty percent of the change in commercial net short position…8,216 contracts worth.  The remaining fifty percent was made up by the traders in the other two groups…the ‘Other Reportables’ and the ‘Nonreportable’/small traders.  Here’s the Disaggregated chart for that.  Click to enlarge.

The commercial net short position in gold is now up to 14.46 million troy ounces.

Here’s the COT chart for gold…and it’s almost five weeks out of date as well.  Click to enlarge.

I expect that this Friday’s COT Report, for positions held at the close of COMEX trading on January 4 I believe…will show a bit more deterioration in gold as well, but nowhere near as bad as what was in this latest COT Report…touch wood.

I’ll have a bit more to say about the above in The Wrap further down.

We will also get January’s Bank Participation Report this Friday…showing what happened in December…and that will allow Ted to recalibrate the short position of JPMorgan’s short position in silver…unless he believes that Citigroup is now a significant short holder in that precious metal as well.

I’m not going to bother with the goings-on in platinum or palladium…or mention the Days to Cover data for silver, until the COT Report data is up to date — and that’s not going to happen until the end of February.  As a matter of fact, it may take until the March 1, 2019 COT Report before we’re caught up totally.


Here are two charts that Nick passed around on Monday, that I didn’t have room for in Tuesday’s column, so here they are now.  They show Perth Mint gold and silver bullion coin sales, updated with January’s data. During that month they sold 31,189 troy ounces of gold coins — and 828,854 silver bullion coins.  Click to enlarge for both.

It was a very slow news day on Tuesday — and I don’t have much in the way of stories for you today.


CRITICAL READS

The Hard Proof That Shows Keynesians Are DEAD WRONG — Mike Maloney

Three decades of a lost, zombified economy. That’s what traditional Keynesian economics brought to Japan – will the United States suffer the same result?

This 11:15 minute video clip from Mike starts off slowly, but it is worth watching, as his points are well made towards the end.  It was posted on the goldsilver.com Internet site on Tuesday sometime — and I thank Roy Stephens for sending it our way.


The One Reason Silver and Silver Stocks Will Explode Higher — Jeff Clark

Join GoldSilver‘s Senior Precious Metals Analyst Jeff Clark as he gives you an expert’s perspective on the incredible upside potential of silver.

In this presentation, Jeff Clark details specific equity investments to his audience. Jeff’s opinions are his own and do not reflect the opinion of GoldSilver or its owners. Jeff’s advice is general in nature and should not be construed as financial advice; investors should always perform their own due diligence before making any investment.

This presentation from Jeff is pretty good, except for a couple of things.  First, his chart that depicts “A Coming Short Squeeze” at the 8:10 mark was at least a month out of date.  But the most important thing is that he’s being intellectually dishonest, as he’s ignoring the always present 800 lb. gorilla in the living room — and that’s the ongoing short position held in the COMEX futures market, with JPMorgan as short seller of last resort. He knows all about this. If all these bullish factors he’s talking about are true — and they mostly are…then why hasn’t the silver price blow sky high already?  You know the answer…the one that he never mentions in his presentation — and also says ‘NO’ to at the 8:40 minute mark in this video.  This leopard hasn’t hasn’t changed his spots since I worked with during our days together at Casey Research.

The presentation runs for 19:30 minutes — and it’s certainly worth watching, despite its obvious shortcomings, as there is some great material in it.  It was posted on the goldsilver.com Internet site on Tuesday — and the first person through the door with it was Harold Jacobsen.  Another link to it is here.


Tennessee Considering Bills Restoring Gold and Silver as Sound Money

If two bills offered for consideration in the Tennessee legislature become law, gold and silver will be a step closer to being restored to their rightful place as sound money and legal tender.

A pair of companion measures offered by Representative Ron Gant and Senator Dolores Gresham in the Tennessee House of Representatives and Senate respectively, would prohibit state sales and use tax from being collected on the sale of platinum, gold, or silver bullion.

To be honest, such bills should be unnecessary.

The bills in Tennessee aim to right that wrong as do similar bills filed in Arizona, Wyoming, and West Virginia since the beginning of the current legislative season.

In a statement published by the Ron Paul Institute for Peace, Dr. Paul praised the bill filed in Arizona for “ensuring that people are not punished by the taxman for rejecting Federal Reserve notes in favor of gold or silver. Since inflation increases the value of precious metals, these taxes give the government one more way to profit from the Federal Reserve’s currency debasement.”

I thought I posted a story about this last week, but when I checked, it was a story about the state of Virginia doing the same thing, so this is new.  It was posted on the the newamerican.com Internet site on Saturday — and I thank Jim Gullo for sharing it with us.  Another link to it is here.


Some Central Banks Have Gold Fever, and It Might Be Sensible

Gold bugs aren’t always rational. That’s not the case for central banks, whose purchases of the yellow metal last year were the highest since the United States broke the link between gold and the dollar in 1971. For these institutions, it’s less a short-term gamble that prices of the precious commodity will rise, and more a concern that dollar dominance could gradually be eroded.

Central banks bought 651.5 tonnes of gold in 2018, the second highest annual total on record and up 74 percent from the year earlier, according to the World Gold Council. As in the past three years, Kazakhstan, Russia and Turkey were significant buyers, but were last year joined by the likes of Hungary, India and Poland.

Official foreign exchange reserve managers tend to be tight-lipped. But Hungary in October explained that it had increased its gold reserves tenfold for long-term stability reasons, rather than short-term investment considerations. The precious metal was in limited supply and it had no credit or so-called counterparty risks, because it was not a claim on a specific institution or country.

Such thinking may seem like a version of one reason individual investors stock up on gold: because they are terrified of holding ostensibly riskier assets, like shares and bonds. With geopolitical tensions rife, that would be understandable.

But there are two bigger reasons for central banks to buy gold…

This rather brief gold related news item showed up on The New York Times website of all places on Tuesday — and it’s worth reading.  I thank Richard Saler for pointing it out — and another link to it is here.


Congressman Demands CFTC Explain Its Failure to Find Silver Market Manipulation Where DOJ Did

A member of the U.S. House Financial Services Committee today pressed the Commodities Futures Trading Commission (CFTC) on its conspicuous failure to uncover the very silver market manipulation now being prosecuted by the U.S. Department of Justice.

In a probing letter dated February 5 to CFTC Chairman J. Christopher Giancarlo, Rep. Alex X. Mooney (R-WV) writes:

U.S. Justice Department obtained a guilty plea from a former commodities trader for JPMorganChase & Co. to charges of manipulating the gold and silver markets between 2009 and 2015, and its investigation into the actions of related parties is ongoing.

The period of time at issue substantially overlaps the time during which your commission was investigating complaints of manipulation of the silver market – 2008 to 2013. However, in 2013, the commission announced that it had closed its investigation without finding any wrongdoing.

Why did the commission fail to find the wrongdoing the Justice Department has confirmed and continues to investigate? Also, will the commission now be re-opening its investigation into silver market manipulation and opening an investigation into gold market manipulation? If not, why not?

Meanwhile, Rep. Mooney asks about the CFTC’s recent refusal to answer questions posed by a non-profit watchdog group called the Gold Anti-Trust Action Committee (GATA) that investigates government interventions in gold and silver markets.

Well, dear reader, let’s see what kind of answer the CFTC comes up with here.  This article appeared on the moneymetals.com Internet site on Tuesday — and I found it in a GATA dispatch yesterday.  Another link to it is here.


The PHOTOS and the FUNNIES

This first photo was taken by the New Zealand Department of Conservation — and the caption reads “A northern royal albatross inspects the New Zealand Department of Conservation’s ‘Royal Cam’, a 24-hour live-stream that documents an albatross nest in breeding season.”  Their chick hatched on January 24.  Click to enlarge.

This second photo was taken by Robin Moore — and the caption on this one reads “For 10 years, Romeo, the last known Sehuencas water frog on the planet, led a solitary life in a conservation centre in Bolivia. Now scientists have found him a Juliet on an expedition into Bolivia’s cloud forest.”  Click to enlarge.


The WRAP

With so little volume in both precious metals again yesterday…for whatever reason…not much should be read into the price action — and once again I was heartened by the price activity in their underlying share prices.

Here are the 6-month charts for all of the Big 6 commodities and, once again, there’s not much to see.  Click to enlarge.

And as I type this paragraph, the London open is less than ten minutes away — and I see that the gold price is lower by a bit in Far East trading on their Wednesday, but has jumped up a tad in the last few minutes…ditto for silver and platinum.  However volume is virtually nonexistent once again, so nothing much should be read into the price activity of any of the four precious metals, although the dollar index is higher by a bit.

At the moment, gold is down 20 cents an ounce — and silver is down 4 cents.  Platinum is now down only a dollar — and palladium by 3.

Net HFT gold volume is a very tiny…barely over 17,500 contracts — and there’s only 172 contracts worth of roll-over/switch volume on top of that.  Net HFT silver volume is extremely light as well at 6,100 contracts — and roll-over/switch volume in this precious metal is 761 contracts.

The dollar index tried to rally a couple of times in evening trading in New York yesterday, but both went nowhere.  However, a somewhat more robust rally began around 1:15 p.m. China Standard Time on their Wednesday afternoon — and the index is up 15 basis points as of 7:45 a.m. GMT in London…8:45 a.m. CET in Zurich.

As I mentioned in the discussion on the COT Report yesterday, I’m still on the look-out for any sign that we’re going to get one of these engineered price declines courtesy of one or more of the groups of commercial traders that are normally behind that sort of thing.  But so far, there’s been nothing.

We’re still very much in overbought territory in gold, but approaching neutral in silver.  Of course the commercial traders could get overrun, but if that does occur, it will be, as Ted Butler says…the very first time it has happened.

Right now it appears that it’s turning into the “same old, same old” scenario…however the jury is still out.  However, one of these times, it won’t turn out that way.

And as I post today’s missive on the website, I note that the gold price hasn’t done much of anything during the first hour of London trading — and it’s down 30 cents. Silver is still down 3 cents. Platinum and palladium are down 1 dollar and 2 dollars respectively.

Gross gold volume is 24,000 contracts — and minus what little roll-over/switch volume there is, net HFT gold volume is a very tiny 23,400 contracts. Net HFT silver volume is a bit over 7,500 contracts — and there’s 775 contracts worth of roll-over/switch volume on top of that.

The dollar index has been chopping quietly sideways during the first hour of London/Zurich trading, but has dipped a bit in the last few minutes — and is up only 8 basis points as of 8:45 a.m. GMT/9:45 a.m. CET.

That’s it for yet another day — and I’ll see you here on Thursday.

Ed